The proof of the pudding is in the eating, the old saw goes. This one, alas, is a mélange of several old shit sandwiches bound in liaison of subterfuge and seasoned with political absurdities.
Murdoch Warns Pope Francis about Ecuador’s President Correa
By William K. Black Quito: July 12, 2015 Now that Pope Francis’ visit to South America has ended we can reflect on the Rupert Murdoch’s effort to slam Pope Francis and Ecuador’s President Rafael Correa using the pretext of the Pope’s … Continue reading →
So we finally have a ‘historic’ agreement on Greece. You know the details:Tsipras surrendered on everything, except one thing.
Overall, the only point here is the delayed upgrade to Russian forecast for 2015-2016. Lower rate of contraction forecast for 2015 (from -3.833% in April WEO to -3.4% this time around) and return to (basically zero) growth in 2016 (+0.2% forecast in july compared to -1.096% in April).
In its briefing on the WEO update, IMF said (emphasis mine): “The other country where the numbers are very bad is in Russia. We now forecast Russia’s growth to be negative at -3.4 percent. It’s a bit better than the forecast in April. That comes from a small improvement in commodity prices and a small increase in confidence, but that’s clearly a very large negative number that will lead to a very tough year in Russia.”
Additional risk factor, noted by the IMF, is rates reversion in the U.S. and closing on the rate reversion cycle re-start in the euro area: “…this is going to be the year in which the interest rate in the U.S. is going to start increasing. The date by which the interest rate is expected to increase in Europe will also get closer, and so you are going to see tighter financial conditions, which means that capital will tend to go back to where the rates are attractive. So far, it hasn’t been happening on a very large scale. I think we can expect some capital outflows from a number of these countries, and these always create some problems but they can handle, but that is a challenge they are going to have to face.”
Just how bad the effect of rates reversion will be is hard to tell. Overall, however, Russian economy has suffered quite significantly from both, the adverse changes in the global credit flows (away from emerging markets in general) and idiosyncratic drivers pushing credit supply lower. Here are two charts covering the latest BIS data we have:
Overall credit:
And sources of funding:
Source for charts above: http://www.imf.org/external/np/pp/eng/2015/062915.pdf
easy access to credit made possible by Greece’s membership created one of history’s most stunning examples of false prosperity
Per latest reports, Eurogroup estimates Greek funding needs at EUR82-86 billion – a far cry from EUR53.5 billion requested from ESM. EUR10-25 billion needed for banking sector (because bailing out European states must always involve bailing out banks)….
As a veteran investor and hedge fund manager, I’ve often pursued strategies that feed off volatility. So for me, the type of schizophrenic, up-and-down action that we saw last week was just what the doctor ordered. Unfortunately, for anyone banking on a positive long-term outcome for Greece and the EU, the doctor making orders may well be named Kervorkian.
The template of over-indebtedness as a response to soaring obligations is scale-invariant, and it always ends the same way: default.When you can’t pay your bills, you can either cut expenses, borrow money or if you’re extraordinarily privileged, print …
Millions of investors around the world are watching China’s stock markets with bated breath. Keith Fitz-Gerald takes a contrarian view that you may not agree with, but is well thought out.
Wait long enough and market stress is met with whatever desperate policy response it takes at that moment.